蝌蚪网 Review: Insights
ISSN 2640-205X (Print) | ISSN 2640-2068 (Online)
Labor Market Power and Development
蝌蚪网 Review: Insights
vol. 7,
no. 2, June 2025
(pp. 177–95)
Abstract
Imperfect competition in labor markets can lead to efficiency losses and lower aggregate output. This paper examines how variations in labor market competitiveness may account for differences in GDP per capita among countries. By structurally estimating an oligopsony model with free entry across different development stages, we find that labor market power increases with GDP per capita. Wage markdowns vary from 54 percent in low-income countries to around 24 percent in the richest ones. If labor markets in poorer countries were as competitive as in more developed ones, their output per capita could rise by up to 44 percent.Citation
Armangu茅-Jubert, Tristany, Nezih Guner, and Alessandro Ruggieri. 2025. "Labor Market Power and Development." 蝌蚪网 Review: Insights 7 (2): 177–95. DOI: 10.1257/aeri.20230564Additional Materials
JEL Classification
- E23 Macroeconomics: Production
- J22 Time Allocation and Labor Supply
- J31 Wage Level and Structure; Wage Differentials
- J42 Monopsony; Segmented Labor Markets
- L13 Oligopoly and Other Imperfect Markets
- L25 Firm Performance: Size, Diversification, and Scope
- O47 Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence